Senate Begins Debate on Campaign Finance Legislation That Will Impact Charities

Last week representatives of charities met with Senate staff to iron out problems with some provisions of the McCain-Feingold campaign finance reform bill (S. 27). While it appears that substantial progress has been made, it is still possible that some nonpartisan activities of charities could be banned or regulated.

Issues directly impacting charities are only part of a much larger debate that will unfold in the next two weeks. Hard money contribution limits, the soft money ban, media costs, so called “paycheck protection” and other issues will be the subject of amendments and votes. OMB Watch strongly supports campaign finance reform, particularly the hard money contribution limits and soft money ban in the McCain-Feingold bill. Campaign finance reform was listed as the number one issue of concern by nonprofits throughout the country in a survey conducted by the Advocacy Institute, National Committee for Responsive Philanthropy, OMB Watch, and The Union Institute a few months ago. (See http://www.ombwatch.org/npagenda/)

Unfortunately, there are provisions in McCain-Feingold that could directly affect the advocacy voice of charities, particularly through limits on “issue advocacy.” The original draft of the bill contained provisions that included a ban on any broadcast, satellite or cable communication by a corporation – which includes 501(c)(3) organizations -- or labor union that refers to a candidate for federal office if made within 60 days of a general election or 30 days of a primary or caucus. The bill would allow some nonprofits -- 501(c)(4) social welfare groups and 527 political action committees -- to make the broadcast communications during the 60/30 day window, but they would be subject to disclosure requirements and fundraising limitations. It also has a very broad definition of prohibited coordination with candidates and campaigns.

The ban on issue advocacy by charities during the 60/30 day window will mean that charities cannot use broadcast media to lobby during that period. Unlike other corporations, charities are prohibited from supporting or opposing candidates, even indirectly. So the ban would have the unusual impact of squarely curtailing our First Amendment right to lobby.

OMB Watch and other nonprofit groups have urged the bill’s sponsors to exempt them from the issue advocacy provision. We have also urged more narrowly targeted coordination language. It now appears that amendments addressing concerns about coordination will be filed. Further changes are expected to clarify that nonpartisan candidate debates and forums are not prohibited during the 60/30 day window and that the bill refers only to paid advertising, not all broadcast communications.

However, the exemption for charities is still an issue. Three outcomes are possible:

• Charities are exempted from the bill

• Charities are treated like 501(c)(4)s and 527s, and subjected to donor disclosure and fundraising limitations

• It stays the same and charities are prohibited from doing “issue advocacy” during the 60/30 day window.

If charities are treated like 501(c)(4)s, they will be required to disclose if they spend $10,000 or more on a broadcast that refers to a federal candidate within the 60/30 day period before an election, and required to:

• File a report to the Federal Election Commission identifying their organization, the names of candidates identified, the amount and identity of payees of more than $200 and the names and addresses of donors of more than $1,000. This is in addition to the normal filings to the IRS on lobbying expenses.

• Only pay for ads with contributions from individuals (corporate and union money cannot be used for this purpose).

• If the group pays for ads from a special fund, only donors to that fund will have to be disclosed.

We have argued that treating charities like 501(c)(4) organizations is unfair, since 501(c)(4)s are allowed to support or oppose candidates and charities are not. If a charity wants to by an ad for a grassroots lobbying campaign, it should not be limited to paying for it with contributions from individuals and should not be required to reveal the identity of its donors. The recordkeeping involved is duplicative and pointless, since charities are not part of the problem in the campaign finance system. On the contrary, since charities are focused on their public interest mission, and not on electing candidates, a strong public policy voice from charities is part of any real solution.

We urge you to contact your Senators and ask them to:

• Support the hard money contributions limits and soft money ban in McCain-Feingold

AND

• Exempt charities from the issue advocacy provision.

For more information contact Kay Guinane at OMB Watch (202) 234-8494 or kguinane@ombwatch.org

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